The Big Ideas of 2008

The Myth Maker

Alan Greenspan's thick weave of lies and deceit may mean the American economy never recovers.

There's a myth growing around Alan Greenspan. Just a year after he stepped down as Chairman of the Federal Reserve, he's now seen as some kind of financial wizard, economic genius and gifted virtuoso, who delighted in pure mathematics and jazz when he was young. Developing almost into folklore, it's said he learned some Promethean magic from the rational self-interest in Ayn Rand's Atlas Shrugged and then became the great macroeconomist who engineered the longest period of growth in American history.

For years, whenever he lowered the interest rates, the world gasped "ohhhh," and whenever he injected more liquidity into the markets, we all sighed "ahhhh." But it was all a bunch of bullshit. In reality, he was a man so blinded by the neoclassical money games that he couldn't see the forest through the trees. Despite a flurry of warnings over many decades, he never saw the ecological crisis coming – a changing climate, vanishing salmon runs, beetle infestations and fish disappearing from the seas. All these calamities were mere "externalities" to him – not a part of his world.

He could have been the man who shook up the world of economics. He could have started including ecological measurements into his fiscal calculations, put America's national accounts in order and redefined what economic progress means. But he didn't, and in that sense he is a grand failure, just another money man and bean counter who did not seize the moment. History will not be kind to him.

72 comments on the article “The Myth Maker”

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I find this article highly subjective given its lack of evidence. It sounds like the author is just voicing his opinions, he doesn't provide any arguments or evidence to back up these claims. This magazine would be of much better quality if it ommitted these kinds of article. BTW, I'm not defending Greenspan, just merely criticizing the way this article was written.

Berne Mills

Macroeconomics in North America has largely been practice of theories of Milton Friedman from the University of Chicago.
He stressed the need to keep inflation in check by minimizing government spending on social programs and low wages, keeping the workers in a constant state of desperation. I wonder if there is a case here for a class action discrimination lawsuit for N. American workers.
Real wages are what a worker can actually buy with his take home nominal wage. As any working man will attest this has depreciated in the last 20 years. In the mean time when one looks at housing this has certainly appreciated. When we look at the problems in the subprime mortgage
financing and wonder, what effect does that have on the G.D.P.? Is our G.D.P. an illusion? Is there such a thing as real G.D.P. and nominal G.D.P.?
My belief of macroeconomics is that it is like a plant, that you want to thrive, you water the roots not the branches.

Wordly Philosopher

He could have started including ecological measurements into his fiscal calculations, put Americas national accounts in order and redefined what economic progress means.

The Federal Open Market Committee does none of those things. They make monetary policy.

Josh N

Wow, what an unintentionally hilarious piece. Kalle, you make the unfortunate error of confusing the worlds of microeconomics and macroeconomics not that they don't overlap. Mr. Greenspan didn't internalize externalities because as Fed Chairman thats not his job. His job is to protect things like output, inflation, employment and the money supply. Now while none of these factors pull at the heartstrings, they are very important to make sure the State's economy stays healthy. I suppose you could argue that Mr. Greenspan, by trying to avoid recessions, stopped long term declines in output and consumption thereby increasing our footprint on the environment since we kept on producing at high output. But then you would be criticizing him for what he is suppose to do! Better to direct your attention to people who do the consuming, rather than the dude who is charged with protecting consumption.

Shane Arnold

I agree with the most of the comments above there isn't enough substance in this to convince me of anything.

nine iron

Uhh... you packaged this on the homepage as a major feature. Is there an article to back up your soliloquizing, or do you just like to hear yourself speak? Your commentary introduces nothing new about Greenspan. It goes nowhere. A myth is growing...? It's been long established. What's your point?


Kalle, I grew up with my parents praising Greenspan for what he did, never being fully aware of what it is that made him so great. But now with my age, having read works like Joel Hawken's Ecology of Commerce, Daniel Quinn's publishings, and Culture Jam, I understand the picture of the true cost of Economics and want to see a change in the way our society values the measure of progress.


This article should go into much more detail about his actual economics then dismiss him for not being an environmentalist that obviously he isn't. Why, this article is about what it is about, read and digest it as it is and then critique it for what it is not what it should be.


This man Greenspan should read the Holy Qur'an:

Surah 30. AR RUUM 41
The Romans, The Byzantines

Mischief has appeared on land and sea because of the meed that the hands of men have earned. That Allah may give them a taste of some of their deeds: in order that they may turn back from Evil.

Surah 17. AL ISRAA' 26
Isra', The Night Journey, Children Of Israel

And render to the kindred their due rights, as also to those in want, and to the wayfarer: but squander not your wealth in the manner of a spendthrift.

Surah 89. AL FAJR 20
The Dawn, Daybreak

And ye love wealth with inordinate love!

Surah 25. AL FURQAAN 67
The Criterion, The Standard

Those who, when they spend, are not extravagant and not niggardly, but hold a just balance between those extremes;

Surah 15. AL HIJR 3
Alhijr, Stoneland, Rock City

Leave them alone, to enjoy the good things of this life and to please themselves: let false Hope amuse them: soon will knowledge undeceive them.


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